[webwright]

Respectfully disagree.

Penny stocks? Real estate? Gambling? Entrepreneurship? Credit cards? No one is stopping people from "investing" their life savings in any of these areas, and people are losing everything in these areas every day.

We don't need to protect people from making bad decisions with their own money.

Your arguments about the capital structure and lawsuits are pretty spot on, though... under the current system. It doesn't seem too hard to bake some protections into the reform. You don't see people suing casinos when they lose their life savings there.

[robmay]

Well, but here's the problem... Backupify was my third attempt at raising VC. Before I did it, I would have jumped at the chance to raise money from anybody, even average Joes. But now that I know the difficulty in managing investors and their expectations, I would never consider it. So this idea will develop a lemons problem (similar to what you see in penny stocks) which is that any entrepreneur who understands the game well won't participate and won't raise this kind of funding, so you end up with the bad ones, and the uneducated/inexperienced ones. Some of the latter will ultimately be successful, but not enough.

[tptacek]

Casinos are intensely regulated. That's something you want for startups?

[drumdance]

Yeah, but penny stocks and gambling have unsavory reputations. At a minimum, someone researching them will be met with a blizzard of warnings about how the odds are stacked against you. I'm not sure that's true of entrepreneurship.